As consumers’ financial stress rises, they’re increasingly turning to mass retailers like Walmart for their groceries, according to a new report by customer data science and analytics company Dunnhumby.
The company’s quarterly Consumer Trends Tracker—which interviews 8,500 consumers from the US, Canada, Brazil, Colombia, Mexico, and Chile—found that mass retailers (big-box stores like Walmart and Target) and traditional supermarkets (like Kroger, Albertsons, and regional banners) have hit the same grocery penetration, 79%, for the first time since the tracker began nearly four years ago.
Mass retailers’ grocery penetration has risen 5 percentage points over that time, marking millions of consumers’ behavior shifts. Walmart’s grocery penetration jumped 6 percentage points YoY, reaching a record 72%. The dollar channel, hitting 42% penetration, has surpassed club stores for the first time in over two years, with Dollar General, Dollar Tree, and Family Dollar all seeing their penetration jump 4–6 percentage points YoY. Discounter Aldi’s penetration also increased 2 percentage points YoY.
While January’s CPI reflected food at home inflation to be around 2%, Dunnhumby found consumers perceive inflation to be 19.6%, and those with income under $50,000 perceive it to be nearly 24%.
“What makes this different from the 2023 inflation spike is that consumer concern persists even as actual inflation moderates,” Matt O’Grady, president of the Americas for Dunnhumby, said in a statement. “When financial insecurity becomes this entrenched, grocery affordability becomes paramount, and shopping behavior doesn’t just snap back.”
The percentage of consumers reporting financial and food insecurity both increased, and more consumers are using coupons through store loyalty programs. Those using AI to shop are also doing so to save $$, Dunnhumby found.
As more consumers look for cheaper prices, former Walmart CEO Doug McMillon said in November the retailer was working to “resist the upward pressure on our cost of goods,” with 7,400 active rollbacks, half of which were in grocery. In its Q4 earnings call this week, the first led by new CEO John Furner, Walmart reported grocery sales at mid-single digits, noting unit volume growth driven by its low prices.